Trust in the sharing economy

Debbie Wosskow surely must not sleep. The “Queen of the Sharing Economy” wears many professional hats, including: founder and CEO of the house exchange business Love Home Swap, serial entrepreneur, angel investor, government advisor and Chair of the UK’s sharing economy trade body SEUK.

In a fascinating discussion of the changing concepts of work at EntrepreneursTalk@Cass in London, Debbie ventured into the challenges and future of the sharing economy. The talk covered everything from small business to the role of government and the hidden potential of women in entrepreneurship. Watch the highlights:

Opportunities in the sharing economy

In a 30 second elevator pitch, Debbie describes her business as “an Airbnb for grownups” and a reinvention of timeshare for the modern day. The idea was born during a stay abroad. Cramped in a “rubbish” expensive hotel with her small children, she couldn’t help but remember her “lovely” and empty home in London. On the flight home she theorized she could surely do something better. Looking into existing timeshare businesses, she saw an opportunity for a new direction.

“People home swap for one of two reasons. Either they know where they want to go and when… There it’s all about having enough inventory. Do you have enough homes where they want to go? But the other reason people home swap – and to use the online dating analogy – it’s a little bit like flirting… then it’s about surfacing interesting suggestions.”

Existing home swap companies at the time – à la those in the movie The Holiday – left major gaps in the digital market. Love Home Swap filled those gaps by serving up a novel combination of technologies: recommendation engines and a community model that inspires trust.

The new economy of trust

Over the last decade, the traditional business model of workers and employers has been in flux. The Great Recession forced an entire generation to devise new ways of generating income that do not rely upon a 9-5 job. This trend was not quashed when the global economy bounced back. In an earlier talk, Jerry Kaplan argued that advances in artificial intelligence will hasten in a new generation of professional gamers, personal shoppers, social media experts and independent artisans.

The recent UK Budget plan looks to encourage these entrepreneurs with new tax free allowances for trading and property income. With governments stepping on board, what obstacles are left? It still boils down to trust.

In the beginning Debbie faced resistance from potential Love Home Swap investors. After all, who would trust a stranger in your bed, your car or your wallet?

More than a decade ago, Ebay completely turned the fear of trusting a stranger on its head. Online payment gateways drove success for this platform by instantly lending security to transactions. Suddenly it became the norm to not only turn to a non-traditional marketplace for goods and services, but to rely upon and trust that venue. Since then the public shift has only accelerated.

“We should absolutely remember how much progress has been made in the last five years. We all benefit from the Airbnb and, to some extent, the Uber afterglow.”

In a sharing economy, trust is no longer just a preference, it’s absolutely key. It’s also controversial. Ebay sellers and buyers, Uber drivers and their passengers, Airbnb hosts and their guests, Ikea flat-pack building TaskRabbits… in the sharing economy, all participants are judged by their performance. If consistently scored low and therefore found wanting, account deactivations and limitations occur on platform, instantly removing a source of income or convenient services.

As helpful as they are, these scores are not without trust issues themselves. They can be manipulated. Leaders have called for a joined up reputation score system, a way of feeding relevant reputation information across platforms. Given the major differences between platform services, however, “relevant reputation information” is complicated.

The solution put by in place by Love Home Swap is simple. All users must offer their own homes on the site to take advantage of others. Once the users become vested in the product, they share more, committing to the community. A key selling point for Love Home Swap is the experience of “walking in another’s skin”.

So how can new businesses overcome people’s reluctance to trust strangers? In her role as Chair of the SEUK, Debbie is helping to develop the world’s first trustmark for the sharing economy with Oxford University and PWC. The metric will be piloted this year.

Women entrepreneurs

It was clear during the talk that achieving encouragement and support for women entrepreneurs is dear to Debbie. Women still cannot access capital in ways that are meaningful. As an angel investor, Debbie believes she has a responsibility to pay the opportunities and chances she has received forward. The last three businesses she backed were female founded Internet of Things companies to which – despite differences in purview – she believed she could offer business guidance. The “unsexy” parts of the sharing economy interest her, including opportunities in Healthcare, Logistics and B2B.

She stressed women in the sharing economy are a huge untapped potential, with her research showing 65% of individuals participating in these platforms are female. By empowering homebound women and enabling them to work differently there is innovation that can be driven for and by women. Organisations such as Angel Academe (supported and sponsored by Thomson Reuters) are working to drive this forward.

Look to the future, build for exit

In one of the most frank and interesting sections of the talk, Debbie stressed that all start-ups who take on investment should be built for exit. It’s clear that the incumbent businesses are starting to take notice of the sharing economy. In 2015, Wyndham bought a stake in Love Home Swap whilst Hyatt did the same with a rival (OneFineStay). The benefit of a partnership model for start-ups is clear: They receive access to a global audience without the risks of expansion or the costs of advertising. Meanwhile, established giants like Wyndham and Hyatt gain access to growing alternative markets.

Debbie doesn’t believe the sharing economy, save for Uber, is a meaningful threat to current businesses. Rather, like travel agents and online agents, industries will expand to offer alternatives.

The key insight from the talk to take away?

No matter what you are pitching, always present your idea as if you, and your company are the only ones who could conceivably make it a success.

About the series

Thomson Reuters Labs™ partners with Cass Business School to bring you EntrepreneursTalk@Cass in London. These interview-based evening events feature founders of successful start-ups from London and take place at Cass Business School. EntrepreneursTalk@Cass are designed to inspire students, entrepreneurs and anyone interested in tech.